Eurozone: Inflation expectations taking a nose-dive – Danske Bank

Sandeep Kanihama FXStreet Contributor

Christin Tuxen, chief analyst at Danske Bank, points out that the central bank credibility continues to be challenged with notably Euro area (market-based) inflation expectations taking a nose-dive yesterday.

Key Quotes

“The 5y5y inflation swap rate declined to 1.18%, setting another all-time low print. While there was no particular catalyst for the drop yesterday, such moves should be much concerning to the ECB: this essentially suggests that markets do not believe in the narrative Draghi conveyed last week at the press conference that ECB has the necessary tools to deal with a downturn.”

“Draghi’s welcome address at the Sintra conference next week will be closely watched for any clues about future ECB policy actions.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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